California Billionaires Seek Ways to Avoid Proposed Wealth Tax

Lawyers and wealth advisers are already drawing up plans to shield assets, even as the proposal may never become law.

Published on Feb. 15, 2026

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A proposed tax on California billionaires has the state's ultra-wealthy exploring ways to reduce their net worth and avoid the 5% levy on assets over $1.1 billion. Lawyers and wealth advisers are advising clients on strategies like getting divorced, moving artwork out of state, and buying luxury homes to shift assets below the $1 billion threshold. While the proposal faces significant hurdles to becoming law, it has generated tremendous buzz and forced the richest Californians to rethink their tax planning.

Why it matters

The proposed California billionaire tax reflects growing public sentiment around economic inequality and the desire to have the ultra-wealthy pay more. However, the potential for extensive tax avoidance strategies by the targeted population raises questions about the measure's ultimate effectiveness and impact.

The details

The proposed tax, backed by a healthcare workers union, would impose a one-time 5% levy on the wealth of California residents worth at least $1.1 billion. Lawyers are advising clients on tactics like getting divorced, moving valuable artwork out of state, and purchasing luxury homes to shift assets below the $1 billion threshold. The Franchise Tax Board would closely scrutinize every taxpayer potentially subject to the tax, examining residency, asset valuations, and other financial details.

  • The proposed tax would apply to California residents as of January 1, 2026.
  • The healthcare workers union behind the proposal needs to collect nearly 900,000 valid signatures by April to put it on the November 2026 ballot.

The players

Andrew Katzenstein

A partner with the Holthouse Carlin Van Trigt accounting firm who spoke at a conference advising wealth advisers on strategies to avoid the proposed tax.

Chris Mays

A partner at the Armanino accounting firm near Los Angeles who has been discussing with clients whether to buy additional luxury homes to reduce their taxable wealth.

David Gamage

A University of Missouri law professor who helped write the union's tax proposal, who believes no more than a couple of people are close enough to the $1 billion threshold to avoid the tax with a few maneuvers.

Matt Brown

A partner with the Brown & Streza law firm who expressed skepticism about clients being too aggressive in trying to avoid the tax, citing the potential legal risks and complexity.

Bernie Sanders

The U.S. Senator from Vermont who criticized the billionaire class for their "extraordinary greed" and objections to paying higher taxes to fund healthcare programs.

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What they’re saying

“What's the first way to avoid the tax? Get divorced.”

— Andrew Katzenstein, Partner, Holthouse Carlin Van Trigt (Society of Trust and Estate Practitioners of Orange County conference)

“The first conversation was, 'Well, are we leaving or are we not?' And then the next conversation is, 'OK, we're staying. So how are we going to mitigate this?'”

— Chris Mays, Partner, Armanino accounting firm (Phone interview)

“We have got to deal with the greed, the extraordinary greed, of the billionaire class. These guys cannot have it all.”

— Bernie Sanders (Call with reporters)

What’s next

The judge in the case will decide on Tuesday whether or not to allow Walker Reed Quinn out on bail.

The takeaway

This case highlights growing concerns in the community about repeat offenders released on bail, raising questions about bail reform, public safety on SF streets, and if any special laws to govern autonomous vehicles in residential and commercial areas.